77 Bank : Results for the First Half of Fiscal Year Ending March 31, 2023 (December 6, 2022)

Leading company creating a path to the future

Results for the First Half of Fiscal

Year Ending March 31, 2023

IR Presentation

Materials were prepared for the Bank's presentation of its results for the first half of fiscal year ending March 31, 2023 held on December 6, 2022.

December 6, 2022

Contents

1. First Half Financial Summary

... 2

2. Projected Performance

... 11

3. Business Strategy

... 14

4. Sustainability

... 37

The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023

1

01

First Half

Financial

Summary

The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023

2

1. First Half Financial Summary (Summary of profits and losses)

															(Unit: JPY bn, %)
Summary of profits and losses			FY2021			FY2022			YoY change
(Non-consolidated)			1H			1H		Increase/decrease	Rate of change %
Gross operating income			38.5			42.6			4.1				10.6
[	Core operating income	]	[	44.4	]	[	44.4	]	[	0.0	]	[	(0.1)	]
	Interest income			37.7			39.0			1.3				3.4
		Interest on loans and bills discounted			20.9			22.5			1.6				7.3
		Interest and dividends on securities	A		16.7			16.2			(0.5)				(3.1)
	Fees and commissions			6.4			6.3			(0.1)				(1.4)
	Other operating income			(5.6)			(2.7)			2.9
		Gain (losses) on bonds	B		(5.9)			(1.8)			4.1
		Gain (losses) on forex transactions						(0.8)
				(0.1)					(0.7)
Expenses			24.8			23.5			(1.3)				(5.2)
Substantial operating income			13.7			19.1			5.4				39.4
[	Core operating income	]	[	19.6	]	[	20.9	]	[	1.3	]	[	6.3	]
[	Core operating income	]	[	13.1	]	[	16.5	]	[	3.4	]	[	25.8	]
(excl. gains (losses) on cancellation of investment trusts)
Provision of general reserve for loan losses	[1]		2.1			(1.0)			(3.1)
Operating income			11.6			20.1			8.5				72.4
Special income and losses			5.9			(0.6)			(6.5)
	Bad debt disposals (-)	[2]		0.3			3.6			3.3
	Gains on reversal of reserve for loan loss	[3]		0.0			0.0			0.0
	Gain (losses) on stocks	C		5.5			3.4			(2.1)
	Gains (losses) on investments in money held in trust	D		1.3			0.2			(1.1)
Ordinary income			17.5			19.5			2.0				11.2
Extraordinary income			-			-			-
Extraordinary loss			0.4			0.3			(0.1)
Income taxes (incl. deferred taxes)			5.3			6.2			0.9
Net income			11.8			13.0			1.2				10.1
Credit-related expenses [1] + [2] - [3]			2.4			2.6			0.2
Total gains (losses) from securities [A + B + C + D]			17.6			18.0			0.4
	After excluding foreign currency-denominated procurement costs		17.3			16.8			(0.5)
Summary of profits and losses
(Consolidated)
Ordinary income			18.4			19.8			1.4				7.4
Net income attributable to owners of the parent			12.2			13.0			0.8				6.4

< Core operating income >

In addition to an increase in interest income, factors such as a decrease in expenses resulted in an increase in income of JPY 1.3 billion year-on-year.

< Ordinary Income and net Income >

Although credit-related expenses increased slightly, ordinary income and net income increased JPY 2.0 billion and JPY 1.2 billion year-on-year respectively, thanks partly to an improvement in gain (losses) on bonds.

Income from customer services*

Income from customer services

Income from customer services (after excluding foreign currency-denominated procurement costs)

(Unit: JPY bn)

4.5 3.9

1.8 1.7

(1.3)	(1.6)
FY2020	FY2021	FY2022
1H	1H	1H

*Operating income from services for customers=

(Average balance of loans and bills discounted × Loan to deposit spread) + Fees and commissions - Expenses (Retirement benefit costs incl.)

The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023

3

1. First Half Financial Summary (Interest income)

(Unit: JPY bn)

						FY2021			FY2022
						1H			1H		YoY change
Interest income			37.7			39.0			1.3
	Investment income			38.0			39.4			1.4
		[ Interest on loans and bills discounted	]	[	20.9	]	[	22.5	]	[	1.6	]
		[	Interest and dividends on securities	]		16.7			16.2			(0.5)
		[	]	[	]	[	]
	Fund procurement costs			0.3			0.4			0.1
		[	Interest on deposits	]	[	0.1	]	[	0.1	]	[	0.0	]
											(Unit: JPY bn)
	Major accounts (average balances)			FY2021			FY2022
			1H			1H		YoY change
Loans and bills discounted			5,071.6		5,346.6		275.0
Securities			2,995.8		3,025.4		29.6
Deposits and certificates of deposits			8,636.9		8,864.3		227.4
													(Unit: %)
			Interest rates			FY2021			FY2022
					1H			1H				YoY
Loans and bills discounted interest rate			0.82		0.83		0.01
									1.06
Securities interest rate			1.11				(0.05)
Interest rate on deposits			0.00		0.00		0.00

Interest income increased JPY 1.3 billion year-on-year as a result of an increase in interest on loans and bills discounted thanks to an increase in yen-denominated loans and bills discounted and an increase in yield on foreign currency- denominated loans and bills discounted.

Change factors in interest income

Yen-denominated: +0.8

	Factors in loans	Foreign currency-denominated: +0.8
	+1.6	Average	(Unit: JPY bn)
			balances
		Yield
	Average	+0.2
	+0.4	Others
	balances			+0.2
	+1.2
			Yield	FY2022
			(0.7)
				1H
			Factors in securities	Interest
			income
			(0.5)
FY2021			39.0
1H
Interest	Yen-denominated: (1.7)
income	Foreign currency-denominated: +1.2
37.7

[Reference] Investment and procurement	2.57%
denominated in foreign currencies

Yield on foreign	1.59%		+0.96%
currency-denominated
investments		1.01%
	+0.58%	1.61%
Procurement yield on	1.01%	+0.64%
foreign currency-
denominated*
		0.37%

FY2020	FY2021	FY2022
1H	1H	1H

	*Foreign currency-denominated procurement yield includes foreign currency-denominated procurement
The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023	recorded in other operating income	4